IT sector to bottom out; to watch TCS guidance on BFSI: Experts

According to CNBC-TV18 poll, it could be a tepid second quarter for TCS . The technology major’s net profit may fall 0.9 percent to Rs 6260 crore in Q2FY17 from Rs 6317 crore in last quarter. Its dollar revenue may rise marginally to 1.8 percent to USD 4440 million compared to USD 4362 million while in rupee terms it may be up 1.5 percent at Rs 29738 crore versus Rs 29305 crore quarter-on-quarter. During the quarter, TCS’s EBIT may stand at Rs 7530 crore from Rs 7374 crore or at 25.3 percent versus 25.2 percent (QoQ).

Sandip Agarwal of Edelweiss Financial Services said they haven’t changed their hold rating on the stock and does not see a significant downside, although they expect muted quarter from TCS. The company is expected to have one or two more tough quarters ahead due to their high dependency on BFSI segment, he said.

Traditionally too, the second half has been weak for TCS, he added. The whole sector has been impacted by cross currency.

Would be keenly watching for management commentary on BFSI space, said Sandip Agarwal.

Meanwhile, Govind Agarwal, IT analyst, Prabhudas Lilladher too would be watching commentary on BFSI. However, according to him, all the bad news is already in the price and so expects the sector to bottom out in the current quarter.

Govind prefers Infosys over TCS and Sandip too thinks Infosys has an edge over TCS on one-two verticals like fixed price projects, attrition levels and says it is time to start buying into IT because the sector is close to a bottom now.